In the Digital Era, Can You Afford to Think Analog?

dfeuer

Dec 16, 2016

When I think about why executives sometimes have a hard time wrapping their minds around digital transformation, the example of the RCA connector comes to mind.

This ubiquitous analog cable has been used to connect stereo components since before World War II. It was inexpensive, but it degraded quickly if plugged and unplugged frequently, and could solely be used for audio signals.

In the decades of Fats Domino, John Coltrane, Led Zeppelin—and even all the way through to Rick Astley—the RCA connecter served well as a method to standardize interactions between bulky audio components. Yet when the digital and mobile revolution arrived, with its iPods, laptops, digital music, streaming services, and HD video, the connector quickly became obsolete.

Product silos and the missing platform

So how does the RCA connector relate to digital transformation?

As corporations grow their product portfolios, organizations are built around individual products; those organizations frequently mature to silos, which only occasionally share infrastructure, business expertise, and market approaches.

As demand for products grows, classic examples of “inside-out” thinking take hold. Infrastructure is customized to meet the needs of each product business, and pressure to increase profitability drives a march toward efficiency. All technical requirements are mapped to specific features and market opportunities, and only a subset are implemented. The business group is in constant tension with the technical group, demanding more features, faster, for less cost.

Often, when product silos employ APIs, those silos are thinking analog; they seek to solve an integration problem between large infrastructure components in the cheapest and most efficient way possible. Like the story of the RCA cable, solving individual integration challenges at the product level may address an individual problem, but as the need arises to take a platform approach to business, the integration point quickly becomes obsolete.

A single product's API can’t be used to build a developer community or unlock the network effects and exponential growth opportunity offered by a platform approach. At the very least, an individual product developer will not gain any combinatorial value from the array of functionality many businesses have sitting behind their heavy corporate veneer.

From tactics to strategy—and real business value

Approaching a digital strategy as a corporate mandate—across product silos—alleviates many of these problems. Firstly, considerations are broader and more strategic; the platform has to work for all businesses. This also means the platform transformation process is a prioritized strategic goal, and not merely a tactical enabler for a specific product line. As a strategic initiative, platform developers can build the platform and associated developer community free from the trappings of a specific product’s profitability.

Beyond the benefits of freeing the transformation initiatives from the trappings of the individual business silos, there are several additional benefits that can be overlooked.

Improving developer productivity to drive business value Building a developer program means understanding developers’ wants and needs, to help them be as productive as possible. Security plays a role here too; a developer program should consider who gets access to what, and how. This helps uncover ways to best meet market needs and discover real business value inside a corporation.

Understanding the business implications of exposing APIs What does success look like in the platform world? What are the new KPIs, governance implications, and how will this affect the marketing mix for current corporate products and services? These questions are ill-considered at the individual product level, but at the corporate level, the implications are key to unlocking the exponential growth promise of the platform economy.

Unlocking innovation everywhere The digital revolution is characterized best by the recognition that unlocking innovation means empowering others to innovate. By providing both external and internal developers with the tools to build successful, compelling apps from corporate assets, a corporation can create a network effect of producers and consumers. Internal software development teams benefit from the developer community built around a platform. If the platform is built at the product P&L level, other developers inside the corporation don’t benefit.

Successful digital transformation programs use people, processes, and tools to effect change in an organization. Without the correct scope of authority, development paradigm, and infrastructure, digital transformation programs risk becoming non-scalable integration points, vestiges of an era where linear computing—and linear business development—met the needs of an analog market that didn’t know any better. In the era of digital computing, can you afford to think analog?